2016 (3) TMI 848 - AT - Central Excise

Export price of yarn to Norway and Dubai to arrive at the assessable value rejected - Held that - The value of sale of yarn to independent buyers for export has been rejected solely on the ground that the said sales to unrelated buyers to DTA for subsequent period covered by the show-cause notice. For the purpose of rejecting the export price of yarn to Norway and Dubai, it has been said that the export price are for Dubai and Norway, which is not relevant to goods imported to India. These observations run contrary to the circular of the CBE&C. The circular specifically mentions that the export price of the similar/identical commodity would be a relevant factor in determining the clearance to DTA. It is seen that the Commissioner (Appeals) order runs contrary to the Circular of CBE&C. The order of Commissioner (Appeals) is set aside and the matter is remanded to the Commissioner (Appeals) to re-adjudicate the matter in light of Circular of CBE&C without ignoring the export price of yarn.

Summary

Issues:
1. Determination of assessable value for clearance to Domestic Tariff Area (DTA) by a manufacturer registered as a 100% Export-Oriented Unit (EOU).
2. Rejection of transaction value for related party sales and utilization of Customs Valuation Rules for assessing duty.
3. Interpretation and application of Circular issued by Central Board of Excise and Customs (CBE&C) regarding assessment of goods manufactured in EOU/EPZ units and cleared in DTA.

Analysis:
1. The case involved a manufacturer of HDPE/PP Yarn registered as a 100% EOU seeking to determine the assessable value for clearance to DTA. Show-cause notices were issued to re-determine the value, leading to the rejection of transaction value due to sales to related parties. The Customs Valuation Rules were utilized to calculate the cost of manufacture and fix the assessable value, resulting in duty demands based on the revised value. Both lower authorities confirmed the demands, prompting an appeal before the Tribunal.

2. The appellant relied on a Circular issued by CBE&C allowing the use of export price of identical/similar goods for assessing the value for DTA sales. The Circular emphasized considering factors like sale price of similar goods and export price, providing flexibility in valuation. However, the authorities failed to consider this Circular, leading to the rejection of export prices for unrelated buyers in Dubai and Norway. The Tribunal noted the discrepancy and set aside the Commissioner (Appeals) order, remanding the matter for re-adjudication in line with the Circular without disregarding the export prices.

3. The interpretation and application of the CBE&C Circular played a crucial role in the judgment, highlighting the relevance of export prices in determining assessable value for DTA clearance. The failure to consider this Circular by the lower authorities led to an incorrect assessment, necessitating a re-examination of the case to align with the Circular's provisions. By emphasizing the importance of export prices and the Circular's guidelines, the Tribunal ensured a fair evaluation of the goods for duty calculation purposes, emphasizing compliance with established procedures and regulations.

This detailed analysis of the judgment reflects the key issues addressed, the arguments presented, and the Tribunal's decision based on legal provisions and Circular guidelines, ensuring a comprehensive understanding of the case.